9_Law and State_Volume 17

Underdevelopment, Dependencia, and Modernization Theory 53
considerable amounts — as sufficient reason for avoiding serious efforts
toward the reform of the taxation and finance system or toward resisting
the trend to specialization in a few exports in the sphere of raw materials,
whose harmful consequences are very soon manifest. It must also be conceded
that there is not much conviction in the argument which ultimately
amounted to a claim that the Latin American economy would be better off
if» e- g-> mineral stores, whose exploitation would require the application
of foreign private capital and imported technology, were not tapped13.
Investments in the indigenous industry, however, produce quite different
effects than do investments in the “extraction” sector; here, for the
moment, we may leave open the question of whether the latter should be
ultimately considered as harmful or beneficial. Again, other investments,
such as those in the area of the currency and credit system or in the trade
organization or the infrastructure, are accompanied by other effects.
The alleged decapitalization of Latin America by foreign private investments
can by no means be “documented” in the manner frequently
employed within the literature on dependencia, namely by contrasting
the total foreign capital which has poured into Latin America with the
capital retransferred in the same time period. Indeed, in recent times the
outflow has frequently been considerably greater than the capital inflow.
But this is far from being proof that the input of foreign private investments
is vastly exceeded by the outflow of profits transferred abroad.
Let us simply recall, first of all, that the different capital flows must be
classified according to various time phases and economic sequences. Capital
which, e. g., was retransferred abroad betwen 1960 and 1970, had in
all probability been formed on the basis of investments which were made
before 1960. Thus it is misleading to contrast the total capital flows within
a specific period —in the present example, between 1960 and 1970 —
with each other, for the inflowing capital in this period will for the most
part generate capital only after 1970. Further, it must be considered that,
in the context of a successful foreign enterprise, the time will come in all
probability in which the return flow of capital will exceed the subsequent
investments, Moreover, a distinction made between foreign enterprises
active in raw materials exploitation and those becoming active in
the industrial sector would demonstrate that one cannot start from a
general assumption of return flow surpluses. Ultimately, however, definitive
conclusions would be possible only on the basis of overall calculations,
for which the source material is not nearly available to an adequate
degree. Without having to take up a supposition frequently expressed by
economic historians, it would be very useful to consider whether, in terms
of an overall accounting of the past 150 years, more foreign capital has